TaxTMI 
TaxTMI 
2006 (9) TMI 202
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.... referred to individually as "the item") under brand names which are the proprietary brand names of the applicant. Both the items consist of a dispenser and filler. The filler is filled with "odoriferous substances", which is installed inside the dispenser. The dispenser is attached with the water pipe which is connected to toilet bowl. The items dispense a continuous dose of the powerful concentrated chemical formulation into water, which is released to the toilet bowl, thus cleaning the ceramic surfaces exposed to flushing. This ensures that the washroom is clean and smells pleasant at all times. The filler is required to be replaced from time to time when the dispensable quantity of the liquid is exhausted. 3. The applicant has supplied the following functional details in their application:- (a) Auto Sanitizer - Automatic Hygiene System The Auto Sanitizer provides an automatic and continuous touch-free hygiene maintenance programme for toilets and urinals, 24-hours a day. It is automatic system for maintaining clean washrooms. The features of this item are : ....
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....as an input in the manufacture of the item. According to the applicant, there is a perception within the State Excise Authorities, who levy and collect excise duty under the Medicinal and Toilet Preparation (Excise Duties) Act, 1955 (In short, MTP Act), that any product for the manufacture of which Alcohol is used is liable to excise duty under the MTP Act. Citing the relevant portions of Chapter 34 & Chapter 38 of the Act and of the MTP Act, the applicant has submitted that - (i) classification under Chapter 38 is ruled out in view of the Chapter Note 7 thereunder which clearly excludes products containing, inter alia, alcohol from the purview of this Chapter. For the purpose of this Note, 'alcohol' has the meaning assigned to it in Section 2 of the MTP Act. (ii) Levy is also not sustainable under the provision of the MTP Act in view of its Objects Clause, definition of the term 'toilet preparation' given in the MTP Act and the earlier Ruling of this Authority in the applicant's case itself on the question of classification of Room freshener. For the detailed reasons given therein, it h....
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....einafter be referred to individually as the product]. He reiterated the submissions in support of classification of the two products under Tariff Item 3402 of the Act. As regards the reference made by the Commissioner to the Note 1(b) to the Chapter 34 of the Act, it was submitted by the applicant that the products in question were not "separate chemically defined compounds" and therefore they could not be excluded from the purview of Chapter 34. Referring to the basic description of the two items as given in the application, it was explained that the difference between them was only in their make up in as much as the concentration of the liquid in the two items was different. He further clarified that where the use of the toilet was more then the Auto Sanitizer would be the right item; otherwise, it was the Auto Janitor which would be normally used. Referring to the technical write up of the two items attached to the application it was pointed out that they were marketed also as a cleaning preparation. Since soap is not the basis of these two products, the appropriate classification would be under Tariff sub-heading 3402 90 42. The Ld. Jt. CDR speaking on behalf of the Commissi....
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....nder the MTP Act. We would also examine the alternative classification of the products under Chapter 38 of the Act in response to the second part of the question raised by the applicant. 10. The Commissioner's stand, we observe, is apparently based on a sweeping generalization that as and when there is alcohol content in any product, it must fall under the MTP Act. The decisions of the Hon'ble Supreme Court in case of Dabur India and Baidyanath Ayurved Bhawan have been relied upon by the Commissioner in support of this contention. We have already dealt with this aspect in great detail in our Ruling given in this applicant's case, though for a different product. After carefully examining the provisions of the MTP Act including the scope of the definition of 'Toilet preparation' given therein and the Notes 1(d), 3 & 4 of Chapter 33 of the Act, we came to the conclusion in that case that the products were not 'Toilet preparation' as defined in the MTP Act. We had expressed our view in clear terms that the effect of Note 1(d) would be that if a preparation in the nature of perfumery, cosmetics and toilet preparation falls within the meaning of the MTP Act and contains alcohol or opi....
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....Note 1(b). Apparently, the Commissioner's submission is that the products being organic chemicals would fall under Chapter 29 which, inter alia, applies, to "separate chemically defined organic compounds, whether or not containing impurities". As per the Explanatory Note to Chapter 29 of HSN, "a separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram. In crystal lattice, the molecular species corresponds to the repeating unit cell". It has been further clarified that "separate chemically defined compounds containing other substances deliberately added during or after their manufacture (including purification) are excluded from this Chapter". Having regard to the above explanation, the type of compounds covered in Chapter 29 and the details of the chemical formulations of the two products which are apparently a combination of surfactants, disinfectant, solvents, deodorizing chemicals, dilutant (water) etc. cannot be justifiably treated as falling under the category "separate chemically defined compound". ....
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....s : (a) the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances, contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable". The point for consideration therefore gets focused as to which of the three components gives the product its essential character. Simply stated, this would mean whether the products can be taken to have the essential character of a 'cleaning preparation' or 'disinfectant' ....
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....cal intermediate for other organic chemicals". It has been further stated that "the main uses for ethanol are as an intermediate in the production of other chemicals and as a solvent. As a solvent, ethanol is second only to water". As regards the Propanol-2-ol which is another name for Isopropyl alcohol, it has been indicated in the said Encyclopedia that "it is the lowest member of the class of secondary alcohols and is known as the first petrochemical". It further goes on to say that "uses of isopropyl alcohol are chemical, solvent, and medical......... Because of its balance between alcohol, water, and hydrocarbon like characteristics, isopropyl alcohol is an excellent, low cost solvent....... Isopropyl alcohol is also used as an antiseptic and disinfectant for home, hospital and industry". From the above, it appears that though ethyl alcohol and Isopropyl alcohol do have germicidal/disinfectant/antiseptic uses, their main usage is inter alia as a solvent for oil, resins, fat etc. As regards the other two ingredients which are claimed to be 'solvent and defafter', one of them has been indicated by the applicant as a trade mark name. On checking up this trade mark name in H....
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....face of dirt or what is more broadly known as 'soil'. As per the information collected by us from the Internet in the article titled "The Chemistry of Cleaning - soil removal", (Ref:-www.essind.com/cleaners/gc-chemistry.htm - the website of Essential Industries, Inc.) - "understanding the basic elements of a cleaner's effectiveness against different types of soil is essential to the 'Chemistry of Cleaning." For the sake of convenience, we would like to quote certain relevant portions of this article - "Soil Types Soil can be broken down into three broad categories : organic, inorganic and combination. Organic soils encompass a broad range and include food soils such as fat, grease, protein, and carbohydrate, living matter such as mold, yeast and bacteria and petroleum soils such as motor oil, axle grease and cutting oils......... Inorganic soils include rust, scale, hard water deposits and minerals such as sand, silt and clay..... Combination soils often present the toughest challenge for a cleaner since the soil contains both organic and inorganic components. Proper identification is critical. Most combination soils are removed with a very concentrated, highly built....
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....lders have a number of functions including softening, buffering, and emulsifying. Builders soften water by deactivating hardness minerals (metal ions like calcium and magnesium)..... Builders, in addition to softening, provide a desirable level of alkalinity (increase pH), which aids in cleaning. They also act as buffers to maintain proper alkalinity in wash water. Finally, builders help emulsify oily and greasy soil by breaking it up into tiny globules. Many builders will actually peptize or suspend loosened dirt and keep it from settling back on the cleaned surface." "Solvents Detergents,.......consist of surfactants, chelating agents and builders....... surfactants are designed to remove dirt from a soiled surface. Chelating agents and builders are added to the formula to keep water hardness from interfering with the cleaning process. Water makes up a large percentage of most liquid cleaner formulas. It is not uncommon for water-based detergents to contain 50% water or more.......... Water can be considered an active ingredient that actually adds to the detergency of cleaners. It performs several very important functions in liquid cleaners. Most import....
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....onium compounds. We have also to keep in mind that the ethanol/ethyl alcohol and isopropyl alcohol - the two ingredients of the product in question - are also, per se, having antiseptic/disinfectant action, though they are apparently to be used by the applicant mainly as solvents for oils, fats, fatty acids etc. We have already seen that these two groups of alcohol do have primary function as a solvent used "to liquefy grease and oils or dissolve solid soil into very small particles so surfactants can more easily perform their function". The short question is - can the product under consideration which is evidently a combination product of a cleaner and disinfectant, be treated as having the primary function of a 'disinfectant' with the cleaning function being subsidiary to it or is the reverse position true? It is necessary to state at this juncture that the Tariff classification of any goods would depend on first establishing its exact and correct identity and then looking for the proper Tariff Heading/Item etc. aided by, wherever called for, the Section/Chapter/Explanatory Notes, the General Rules for Interpretation of the Tariff Schedule, the technical/scientific information an....
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.... printed on the label of the bottle with brand name 'NEUTRALLE', which is supposed to contain the chemical formulation as refill. It would therefore be reasonable to infer that the applicant's product is not to be marketed or sold as primarily or solely a disinfectant. It can more appropriately be treated as what is commonly known as 'disinfectant-cleaner'. In the article "Cleaning and Disinfecting the Indoor Environment : Chlorine Bleach, Quats and Phenolics" by Roger McFadden, Technical Director, Coastwide Laboratories (Ref - www.coastwidelabs.com/ Technical% 20Articles/quatbleach.htm), it has been explained in simple terms that "Disinfectants require the removal of soils from a surface before they are effective. Disinfectant cleaners combine the cleaner and disinfectant into a "one-step" process. A disinfectant-cleaner is diluted and then used to remove soils and kill germs all in one application. One step disinfectant-cleaners save labour time and money. Simply stated, disinfectants 'disinfect' and disinfectant-cleaners 'disinfect and clean'". The relevant point to note is the relative role and function of the cleaning process vis-a-vis the disinfecting processes. Cleaning the ....
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....ies are treated as 'cleaners' presupposes that cleaning preparations having 'disinfectant' component as subsidiary to the 'cleaning' component, are generally taken as 'cleaning preparation' only. When a product has primarily or solely the 'disinfectant' function, it is to be labelled and marketed as such, complying with all the relevant regulatory requirements as may be applicable. We may cite the example of the brand 'Phenyle' or 'Dettol' which are labelled and marketed as 'Disinfectant' or 'Antiseptic' respectively. As we have already seen, the applicant's product in question is proposed to be labelled and marketed as a 'cleaner & deodorizer'. Though the percentage of the active ingredients in such products may not always be a true indicator of its use, function and purpose, it is a matter of record before us that as per the information supplied by the applicant, the percentage of the 'disinfectant' component is definitely less compared to that of the 'surfactant' component - a fact which at least does not contradict the claim of the applicant that the product is primarily a cleaning preparation. 20. Regarding the second product, namely, 'Auto Janitor "Bio" Refill', we find fr....
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....by the applicant as representative samples of the items in question also confirm the position that they are to be labelled and marketed in retail pack as cleaner and none of them carries a label of 'disinfectant'. 22. From the above analysis, we are led to the following conclusions :- (i) All the three products in question are in the nature of preparations and having disinfectant qualities which are subsidiary to their primary qualities as a cleaner. The deodorising property is evidently secondary to the cleaning property. (ii) By applying the test of essential character, the three products are to be taken as 'cleaning preparations'. (iii) They are having as basis the organic surface active agents (surfactants). (iv) As is apparent from the information furnished by the applicant, the 'filler' which contains the product is to be replaced from time to time when the dispensable quality of liquid is exhausted. It means the products are to be put up for retail sale. 23. We would now turn to Chapter 34 of the A....
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....ng a basis of soap or other organic surface active agents. For the 'preparations' indicated in (B) above, the Note goes on to explain that "these various preparations generally contain essential constituents and one or more subsidiary constituents. The presence of these latter constituents distinguishes, in particular, these preparations from those described in Part(A) above. The essential constituents are synthetic organic surface-active agents or soaps or mixtures thereof. The subsidiary constituents are : (1) Builders........... (2) Boosters......... (3) Fillers............. (4) Ancillaries (e.g., chemical or optical bleaches, antiredeposition agents, corrosion inhibitors, antielectrostatic agents, colouring matter, perfumes, bactericides, enzymes)". These preparations act on surfaces by bringing the soil on the surface into a state of solution or dispersion. 24. Having regard to our conclusion that the products in question are cleaning preparation having a basis of organic surface active agen....
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....nic surface active agents". As we have found, the applicant's products are cleaning preparations having a basis of organic surface active agents. They must accordingly fall under this Tariff Item. We have noticed that the applicant has submitted that their products in question would be classifiable under the Tariff Item 3402 90 42. For an easy reference and comparison purpose, we reproduce the relevant portions of the Tariff Heading 3402 as follows : Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 3402 20 - Preparations put up for retail sale : 3402 20 10 --- Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents 3402 20 20 --- Cleaning or degreasing preparations not having a basis of soap or other organic surface active agents. 3402 20 90 --- Other 3402 90 -- Other : --- --- …………………………………………….. --- ----....